New Study Finds Health Care Spending Rose Faster Than Inflation

Rising medical prices are the subject of a new study by the Health Care Cost Institute, featured today in an article in Kaiser Health News. The study found that health care costs rose at double the rate of inflation. The article includes this quote from AHIP’s President and CEO Karen Ignagni:

“This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth. Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers.”

More highlights (emphasis ours):

“Prices rose at least five times faster than overall inflation for emergency room visits, outpatient surgery and facility-based mental health and substance abuse care from 2009 to 2010, says the report by the Health Care Cost Institute, a nonpartisan research group funded by insurers.”

“The report shows that people with job-based insurance ‘are paying more and getting less,’ says Chapin White, a senior researcher at the Center for Studying Health System Change, a nonpartisan think tank in Washington. He did not work on the report. Hospitals and other medical providers ‘just seem to be able to raise prices faster than general inflation,’ he says.”

“In North Carolina, one major insurer aims to negotiate contracts with hospitals and other medical providers that limit increases to no more than the medical inflation rate. ‘We have met that goal for the past two years,’ says Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina. That effort, along with lower use of medical services, translated into zero to 5 percent premium increases for policies sold to individuals — the smallest rise in five years.”

“Spending by insurers and policyholders on medical care rose 3.3 percent per person from 2009 to 2010, about twice the 1.6 percent increase in the Consumer Price Index.”